Economic union
Topic: International Trade Policy, WTO and Intellectual Property · NCERT: Beyond NCERT
Meaning
An economic union is a stage of economic integration between countries. It starts from a common market, where goods, labour and capital move freely and all members charge the same tariff on imports from outside. On top of that, members harmonise their economic policies, meaning they bring their fiscal (tax and spending), monetary and regulatory rules into line. Members give up a lot of policy freedom in return for a single, smoothly working economy.
Example
The European Union is the standard example. It built a customs union (1968), then the Single Market (1993), and then coordinated its economic and regulatory policies.
Don't confuse with
- Common market: allows free movement of goods, labour and capital, but does not require members to harmonise economic policies.
- Monetary union: goes one step further, with a common currency and a single monetary policy, as in the Eurozone (1999).
Related concepts
- Stages of economic integration
- Preferential trade agreement
- Free trade agreement
- Customs union
- Common market
- Monetary union
- Trading bloc
- Regional economic groupings
- Regionalism
- Open regionalism